China on Tuesday launched a more market-oriented oil product pricing system to better reflect costs and adapt to fluctuations in global oil prices.

 

A system introduced in 2009 to adjust prices when Brent, Dubai and Cinta crude oil prices change by more than 4 percent over 22 working days, will be abandoned.

 

The new system will shorten the adjustment period to 10 days and remove the 4 percent limit, allowing for swifter reaction to increases or cuts in fuel prices, according to the National Development and Reform Commission, China's top economic planner.

 

The composition of the basket of crudes to which oil prices are linked will also be adjusted.

 

The 22-working-day cycle has triggered complaints about the pricing system, as it often failed to reflect fluctuations in the international market.

 

China has also cut gasoline and diesel prices for the first time this year. From Wednesday, the maximum retail prices of regular gasoline and diesel will be cut by CNY 310 (USD48.30) and CNY 300 per ton. The benchmark retail price of gasoline will fall by CNY 0.23 per liter and diesel by CNY 0.26 per liter.

 

After the adjustment, the retail gasoline price will drop to under CNY 7 per liter in most cities including Beijing, Shanghai and Guangzhou.Operators can determine their own retail prices based on supply and demand and by referencing the regulated prices, according to an official in the commission's price department. 

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